The Secret Life

by Andrew O'Hagan

  ‘Sketch it out for me,’ I said to Wright. ‘Those years before bitcoin. What was happening that would later have an influence? I want to know about all the precursors, all the previous attempts to solve the problem.’

  ‘Back in 1997 there was Tim May’s BlackNet …’

  May was a crypto-anarchist who had been operating and agitating in the cypherpunk community since the mid-1980s. ‘Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner,’ he wrote in The Crypto-Anarchist Manifesto in 1988. BlackNet operated like a precursor to WikiLeaks, soliciting secret information with payments made by untraceable, digital money.

  ‘We all have a narcissistic hubris,’ Wright told me. He wanted to take May’s BlackNet idea further. He was also enthusiastic, in those early days, about Hashcash and B-Money. The idea behind Hashcash, a ‘proof of work’ algorithm where each of a group of computers performs a small task that can be instantly verified (thus making life impossible for spammers, who depend on multiple emails going out with little to no work involved), was ‘totally necessary for the building of bitcoin’. It calls for a small task to be completed that can be instantly verified, like the system that asks you to type a short string of numbers and letters into a box when registering on some websites. Wright said that he spoke to Adam Back, who proposed Hashcash in 1997, ‘a few times in 2008, whilst setting up the first trials of the bitcoin protocol’.

  B-Money was invented by a man called Wei Dai. At the time of its creation, Wei wrote a paper which assumed ‘the existence of an untraceable network, where senders and receivers are identified only by digital pseudonyms (public keys) and every message is signed by its sender and encrypted to its receiver’. The public key, or address, is matched, writes John Lanchester in an essay on bitcoin, to ‘a private key which provides access to that address’. A key is really just a string of numbers and letters: the public key demonstrates ownership of any given address; the private key can be used only by the owner of that address. Wei went on to suggest a system for the exchange and transfer of money. ‘Anyone can create money by broadcasting the solution to a previously unsolved computational problem,’ he wrote. The system had methods for rewarding work and keeping users honest. ‘I admired B-Money,’ Wright told me, ‘and he definitely gave me some of the cryptographic code that ended up in the first version of bitcoin.’ Wright was always careful to give credit to those early developers. ‘Wei was very helpful,’ he went on, but ‘to people like that bitcoin seems a bit of a fudge. It works, but it’s not mathematically elegant.’

  ‘Wei said that?’

  ‘Wei was very polite. But others said it: Adam Back, Nick Szabo. They would probably like to find a more elegant solution to the problem. Perhaps they see the mining system in bitcoin as wasteful: there’s wasted computation in my system – machines which are trying to solve problems and not winning. But that’s like society.’

  ‘Are these early cryptocurrency people in a state of rivalry?’

  ‘Yes, but it doesn’t matter.’

  Kleiman

  The flat in Marylebone where I interviewed Wright had wooden shutters and modern ornaments and pictures, mainly of crows. I set the flat up for work while Craig and Ramona were in the City signing over his intellectual property, and all his companies, to MacGregor. They arrived at the flat a couple of hours late.

  ‘When did you realise the whole Satoshi thing wasn’t going to be a secret for ever?’ I asked.

  ‘Very recently,’ Wright said. ‘I didn’t really believe it would need to come out. What we believed is that we could leave it in doubt – we wouldn’t have to sign using the Satoshi keys or anything else. We have hundreds of patents and papers in progress – research from the beginning – and in the next year we’re going to start releasing them. We thought people could suspect and people could query and we could leave it like that.’

  ‘And how did that change?’

  Ramona said a single word: ‘Rob.’

  The days in St Christopher’s Place were almost languorous. We would bring coffee back to the flat and spread out, and I’d try to build a picture of how he did what he said he did. We put up whiteboards and he bamboozled me with maths. Sometimes he would write at the board for hours, then tear open books and point to theories and proofs. I talked to the scientists he worked with, many of whom were better explainers than he was. One of the things I noticed was that Wright hated claiming outright to be Satoshi and would spend hours giving credit to everyone who had ever contributed. It was odd: we were in the room because he was coming out as Satoshi, yet the claim embarrassed him and I have many hours of tape in which he deflects it. I felt this unwillingness supported his claim because it showed a proper regard for the communal nature of the work. He was contradictory enough sometimes to enjoy the limelight and actively court it, and this would cause trouble for him, but the idea of speaking directly as Satoshi seemed to fill him with dread. ‘I’m afraid that they’re just going to look at my papers because I’ve got Satoshi after my name,’ he told me. ‘I’ve got my little Satoshi mask on, and people go “Aren’t you wonderful, because you were Satoshi?” I wanted the doubt. When I released future papers, I wanted people to go: “Oh, fuck, he could be, and these papers are so good he might be.”’

  Dave Kleiman was to become the most important person in Wright’s professional life, the man he says helped him do Satoshi’s work. They met online: they visited the same cryptography forums and had interacted since 2003. Both men were interested in cyber security, digital forensics and the future of money, but Kleiman was a boy’s boy, an army veteran who loved contact sports and fast living. Five foot ten and weighing fourteen stone, he lived in Riviera Beach, Florida, and from 1986 to 1990 he was an army helicopter technician. When I looked into Kleiman’s life, I discovered he had also done computer forensics work for Homeland Security and the army. After active service he became a deputy in the Palm Beach County sheriff’s office. A motorcycle crash in 1995, when he was twenty-eight, left him in a wheelchair. Kleiman was a drug user and one source told me he was heavily into online gambling and various illicit activities; there is evidence he was associated with the dark web marketplace Silk Road. After the accident he devoted himself to computers, and set up a company called Computer Forensics LLC.

  Until Napster (the brainchild of a teenager called Shawn Fanning) came along in 1999, enabling users to share music files across the internet without a central server, the phrase ‘peer-to-peer sharing’ was familiar only to the early internet’s true believers. Napster, with its user-friendly interface, brought file-sharing to the masses. The old model of copyright and revenue generation became obsolete overnight: people stopped buying CDs; young people got music through the internet for free. The music industry had to reinvent itself or die. Wright told me that his earliest conversations with Kleiman were about file-sharing. In 2007 they wrote a study guide together on hacking. ‘I used to fire ideas off him,’ Wright said. ‘I’m pretty good at maths but I’m not very good at people.’ Kleiman, he said, could put up with his temper, which not everybody could. They began to speak of ways to use the Napster idea in other areas and solve some old problems in cryptography. Wright never, I have to say, made it fully clear how they had collaborated on building bitcoin. I kept returning to the subject, and my doubts would flare up when he failed to be explicit.

  ‘Give me a sense of how the idea of Satoshi formed,’ I said.

  ‘I guess,’ Wright replied, ‘the initial idea was having a pseudonymous head that wouldn’t be cut off.’

  ‘More your idea than his?’

  ‘Probably mine.’

  ‘And was there a point you realised you needed a figurehead?’ I asked.

  ‘We needed people to respond to us,’ he said. ‘But I didn’t really want people to respond to me. There are a couple of reasons for that. I don’t think I would really have sold the idea to anyone. If I’d come ou
t originally as Satoshi without Dave, I don’t think it would have gone anywhere. I’ve had too many conversations with people who get annoyed because it’s me.’

  ‘The blockchain came about as an idea of a ledger,’ he later said. ‘But there were a number of problems that needed to be solved. It needed to be distributed, but how do you make sure people don’t collude – it may seem awful but you don’t put trust in people, you incentivise people to act. And you incentivise people to act by giving them the opportunity to earn something. It’s as Adam Smith says: it’s not through the goodness of the heart, it’s not the baker caring about you, it’s not the butcher caring about you, it’s them caring about their own families. Together, as he put it, the invisible hand controls the way society works.’

  I asked him to explain the distributed ledger in layman’s terms and he went into an algorithmic paroxysm of verbal ingenuity. Ignoring all that, a distributed ledger is a database that is shared among multiple users, with every contributor to the network having their own identical copy of the database. Any and all additions or alterations to the ledger are mirrored in every copy as soon as they’re made. No central authority is in charge of it, but no entry on it can be disputed. Adam Smith’s point about ‘incentive’ is embedded in the way bitcoin works: people do not just buy coins or use them; they ‘mine’ them. Miners use their computers to solve increasingly difficult mathematical problems, the reward for the solving of which can be paid in bitcoin. This keeps the currency honest and, ideally, stops it from being dominated by any single entity.

  I had brought rolls of disposable whiteboard and stuck it up around the flat, and, while we were speaking, he would jump up and cover the walls in formulae, along with arrows, arcs and curves. His wife told me she sometimes goes into the shower room and finds him standing there, stark naked, writing on the steamed-up glass. ‘Was there a primary person doing the maths?’ I asked.

  ‘Me,’ he said. ‘Dave wasn’t really a mathematician. What he did was make me simplify it.’

  ‘How did he know how to make you simplify it?’

  ‘We got to a point in the writing of the Satoshi white paper where it was … People say that it was hard.’

  ‘He wanted you to bring the language down a little bit?’

  ‘A lot. It’s very simple. The elliptical curve stuff is not described in the paper at all, it’s just there. The crypto stuff isn’t described either.’ I asked him to show me the trail of ideas that led to their collaboration. ‘So all these things are there,’ he said, pointing to a 337-page thesis on his computer called ‘The Quantification of Information Systems Risk’, which he had recently submitted in partial fulfilment of a philosophy doctorate at Charles Sturt University. ‘Application to audits, how you analyse failures, deriving the mathematics behind it, simplifying the mathematics and there you go … The core of the bitcoin paper is a Poisson model based on binomial distribution. That’s how it got solved.’

  In 2008 it was a ‘hodgepodge’, he said. I asked him if he felt the development of bitcoin was, at some level, a response to the financial crisis. ‘It was already in process. I saw [the crisis] coming though. It was a kind of perfect storm. During that year, I spoke to Wei Dai. So between him and Hal Finney there were a lot of really good ideas about making money work … [Finney] was the one who actually took what I said seriously. He received the first bitcoin.’

  Wright started turning up to our interviews in a three-piece suit. His suits were unfashionable and his ties even more so – 1970s-style yellow, sometimes paisley – and he would ramble on a range of subjects. On his own subject, he could be brilliant, but he was wayward: he would sidetrack, miss the point and never come back to it. He was nothing like people imagine the mythical Satoshi to be – in fact, he was Satoshi’s comic opposite. He told stories against himself that weren’t really against himself. He was obsessed with his opponents’ views but had no skill at providing a straight answer to their questions. ‘I’m an arsehole,’ he said many times, as if saying so were a major concession. But he wasn’t really, he was actually pretty nice. He was arrogant about maths and computing, which wasn’t so surprising. He also had a habit of dissembling, of now and then lying about small things in a way that cast shade on larger things. At one point, I asked him to send me an email from the original Satoshi account.

  ‘Can you do that?’ I asked.

  ‘Yes,’ he said. ‘But I’d need Rob’s permission.’ When I asked MacGregor he said that was absurd. Wright simply didn’t want to – or couldn’t – give too much away, and that was unfortunate in someone who’d agreed to sit down every day with a writer. He seemed to have full knowledge of that email account, in a way that made it unquestionably his. But somehow, it offended his sense of personal power to prove it. At first, I thought he was a man in existential crisis, like the hero of Bellow’s Dangling Man, brilliant but antisocial, waiting to be drafted. But as the months passed I began to think of him more as a Russian ‘superfluous’ man of the 1850s, a romantic hero out of Turgenev, constantly held back from self-realisation by some blinding secret, showing himself not by action but in speech. Wright talked all day and he scribbled on the board and he called me his friend. He cried and he shouted and he unloaded his childhood and spoke about his father. He claimed to be Satoshi and he spoke Satoshi’s thoughts and described what he did and gave an account of what people misunderstood about his invention and where bitcoin needed to go now. I moved to an office in Piccadilly – it was like something out of John le Carré, all those rooftops and fluttering Union Jacks – and we continued to do interviews. He talked without cease, without direction, and continued to find it difficult to land near the spot where my question was marked on the ground. When I asked to see the emails between him and Kleiman, he shrugged. He said he wasn’t getting on well with his first wife when he wrote them and I assumed that meant they were full of talk about her. ‘Just edit them down for me,’ I said.

  ‘I don’t know if I can find them,’ he said. But I wouldn’t let it go and eventually he sent me a selection and they certainly seem to be authentic. A few of the emails were obviously the same as those quoted in the Wired and Gizmodo stories before Christmas. Wright always said these stories had been provoked by a ‘leak’, the work of a disgruntled employee of his who had stolen a hard drive. In any case, the emails he sent me show a pair of men with shadowy habits – socially undernourished men, I’d say, with a high degree of intellectual ability – operating in a world where the line between inventing and scamming is not always clear. The first email Wright sent me was from 27 November 2007, when he was working for the Sydney accountancy firm BDO Kendalls and the two men were working on a paper on ‘Cookies in Internet Banking’. ‘Next year Dave, we come out with something big. I will tell you, but not now,’ he wrote to Kleiman on 22 December 2007. Kleiman’s reply told him what he was reading – ‘Sagan, Feynman, Einstein’ – and added: ‘I hope we make an event together this year so we can “break some bread” and have a casual conversation, instead of the brain dump middle of the night email exchanges we normally have.’ On 1 January 2008, Wright closed an email: ‘Nothing now, but I want your help on something big soon.’

  The subject of bitcoin came up – quite starkly – in an email from Wright dated 12 March 2008. ‘I need your help editing a paper I am going to release later this year. I have been working on a new form of electronic money. Bit cash, bitcoin … you are always there for me Dave. I want you to be part of it all. I cannot release it as me. GMX, vistomail and Tor. I need your help and I need a version of me to make this work that is better than me.’ Wright told me that he did the coding and that Kleiman helped him to write the white paper and make the language ‘serene’. With a protocol as clever as the one underlying bitcoin, you would imagine the work was complex and endlessly discussed. But Wright says they mainly talked about it by direct message and by phone. Wright was being let go from his job at BDO (the crash was taking effect) and was in the process of retiring with his the
n wife, Lynn, and many computers, to a farm in Port Macquarie. It was there, Wright says, that he did the majority of the work on bitcoin and where he spoke to Kleiman most regularly. The Satoshi white paper, ‘Bitcoin: A Peer-to-Peer Electronic Cash System’, was published on a cryptography mailing list on 31 October 2008.

  On 27 December 2008, Wright wrote to Kleiman: ‘My wife will not be happy, but I am not going back to work. I need time to get my idea going … The presentation was good and the paper is out. I am already getting shit from people and attacks on what we did. The bloody bastards are wrong and I friken showed it, they should stick to the science and piss off with their politicised crap. I need your help. You edited my paper and now I need to have you aid me build this idea.’ Wright told me that it took several attempts to get the protocol up and running. He began to test it early in January 2009. ‘That was where the real money started rolling in,’ he told me. The originating block in the blockchain – the file that provably records every transaction ever made – is called the Genesis block. ‘There were actually a few versions of the Genesis block,’ Wright told me. ‘It fucked up a few times and we reviewed it a few times. The Genesis block is the one that didn’t crash.’ There from the beginning was Hal Finney, who would receive the first bitcoin transaction, on block 9. This was a key moment for the new cryptocurrency: block 9 forever shows that Satoshi sent Finney ten bitcoins on 12 January 2009 – it is the first outgoing transaction we know to have come from Satoshi. Satoshi also sent four other transactions on the same day. I asked Wright who the recipients were – who the four addresses belonged to. ‘Hal, Dave, myself,’ he replied. ‘And another I cannot name as I have no right to do so.’ Wright told me that around this time he was in correspondence with Wei Dai, with Gavin Andresen, who would go on to lead the development of bitcoin, and with Mike Hearn, a Google engineer who had ideas about the direction bitcoin should take. Yet when I asked for copies of the emails between Satoshi and these men he said they had been wiped when he was running from the ATO. It seemed odd, and still does, that some emails were lost while others were not. I think he believed it would be more interesting to play hide and seek than to be a man with a knowable past.